THESIS SUBJECT
IMPROVEMENT OF DEVELOPMENT STRATEGY
FOR INTERNET BANKING SERVICE
OF VIETNAM JOINT STOCK COMMERCIAL BANK FOR
INDUSTRY AND TRADE, PERIOD 2015-2020


ACKNOWLEDGEMENT

i would like to express our sincerely gratitude to our lecturers for MBA
Program, of America who have given us a lot of valuable and new knowledge during
our course helping us to create a close connection between theory and practice. The
lecturers have also instructed and supported us for successful completion of this
Capstone project.
We also extend our sincere thanks to the Directorate of Vietnam Joint Stock
Commercial Bank for Industry and Trade (VietinBank) and our colleagues who have
provided us with required information and assisted us during the preparation of this
document.

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CONTENT

.........................................................................................................................................2
CONTENT........................................................................................................................3
LIST OF ABBREVIATIONS..........................................................................................6
LIST OF FIGURES AND TABLES................................................................................6
Introduction .....................................................................................................................7
CHAPTER 1...................................................................................................................10
GENERAL PRINCIPLES IN BUSINESS STRATEGY .............................................10

2.1.3. The result of business activities of VietinBank ..........................................33
2.2. Real situation of Vietnam Joint Stock Commercial Bank for Industry and Trade
in the last few years....................................................................................................36
2.2.1. Opportunities and challenges.......................................................................36
2.2.2. Strengths and weaknesses of VietinBank....................................................38
2.2.3. Competitive advantages of VietinBank........................................................40
2.3. The current situation of development trategy of Internet banking services at
Vietnam Joint Stock Commercial bank for Industry and Trade................................41
2.3.1. Overall bank development strategy..............................................................41
2.3.2. Internet banking service development strategy............................................43
2.3.3. Advantages and disadvantages of strategy of Internet banking service
development. ..........................................................................................................55
2.3.4. Implementing strategy of Internet banking service development...............56
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CHAPTER 3...................................................................................................................59
IMPROVEMENT OF DEVELOPMENT STRATEGY OF INTERNET BANKING
SERVICES AT VIETNAM JOINT STOCK COMMERCIAL BANK FOR
INDUSTRY AND TRADE PERIOD 2009 - 2012.......................................................59
3.1. Orientation of Internet banking services at Vietnam joint stock commercial
Bank for Industry and Trade .....................................................................................59
3.1.1. Orientation ...................................................................................................59
3.1.2. Objectives.....................................................................................................60
3.2. Vision, missions and values of Vietnam Joint Stock Commercial Bank for
Industry and Trade .....................................................................................................61
3.2.1. VietinBank’s vision......................................................................................61
3.2.2. VietinBank’s missions..................................................................................61
3.2.3. VietinBank’s value.......................................................................................62
3.3. Selection of development strategy of Internet Banking to 2012........................64

SWOT
SVL

Vietnam Joint Stock Commercial Bank for Industry and Trade
Strengths – Weaknesses – Opportunities - Threaths
Silverlake

LIST OF FIGURES AND TABLES

Figure 2.1
Figure 2.2
Table 2.3
Figure 2.4

Chart of VietinBank’s organization
Chart of market share of VietinBank in comparison with banks of Vietnam
The main financial indicators of VietinBank period 2004-2008
Structure of banking service in Vietinbank
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Figure 2.5
Figure 2.6
Table 3.1

Diagram of account development of customers in banks
Table of number of Internet users
Expected number of customers using Internet banking service of
VietinBank till the year 2012



its traditional professional competence but also focus on development of modern
banking applications, of which e-banking is one of the leading goals to meet
requirements for competitiveness enhancement, integration and development.
However, the current development of e-banking in Vietnam Joint Stock Commercial
Bank (VietinBank) for Industry and Trade has been coping with difficulties and
shortcomings. It is a pressing issue to work out a sound strategy for its successful
exploitation and development of e-banking service helping VietinBank to maintain its
position and brand-name in the market.
Therefore, with an aim to enhance quality of banking services for Vietnam’s
banks in general and for VietinBank in particular, we choose the topic
“Improvement of development strategy for Internet Banking Service of Vietnam
Joint Stock Commercial Bank for Industry and Trade, period 2015-2020” for the
research of our Capstone Project in economic master.
Our research contents comprise three chapters:
• Chapter 1: General principles in development strategy.
• Chapter 2: Current status of development strategy for Internet banking service
of Vietnam Joint Stock Commercial Bank for Industry and Trade.
• Chapter 3: Improvement of development strategy for Internet Banking Service
of Vietnam Joint Stock Commercial Bank for Industry and Trade, period
2009-2012.
We do hope that the research will be useful in practice an help Vietnam Joint
Stock Commercial Bank for Industry and Trade to have a sound and effective
strategy to develop its Internet banking service in new stage.

3.

Research objectives

- To further study in theory a business strategy.

analysis and other methods for conclusion on the set goals.

6.

Scientific and practical approach
• To systematize all the basic theoretical on strategic management.
• To assess opportunities, threats, strengths and weaknesses of Vietnam Joint
Stock Commercial Bank for Industry and Trade which will be a ground for
basic development of Internet banking service of Vietnam Joint Stock
Commercial Bank for Industry and Trade.
•

To propose solutions so as to improve the development strategy for

Internet Banking Service of Vietnam Joint Stock Commercial Bank for Industry and
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Trade, period 2009 – 2012.

CHAPTER 1
GENERAL PRINCIPLES IN BUSINESS STRATEGY
1.1. An overview of business strategy
1.1.1. Definition
The nature of strategy is to stretch out future image of an organization in its
business performance and capacity. The common opinions of scholars in modern
business strategy is that in current variable conditions, strategy is briefly and generally
defined as follows: “Strategy is a series of complex activities to mobilize resources of
an organization to obtain its desire goals”


compliance with the market’s changes. It forms firm grounds for research
and performance, investment in fostering staff, market expansion and
product development.

1.1.3. Business strategic management process
Strategic management process includes:

Commitment

DECISION

ACTION

that a company needs to achieve:
 Strategic competitive advantages
 Sustainable competitive advantages
In which:
- Strategic competitive advantages are obtained when a company develops and
implements a strategy that brings value to it.

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- Sustainable competitive advantages are obtained when a company develops a
strategy that its rivals can not develop. (Creating advantages that the current and
potential rivals are not able to develop).
- Above-average profits means the profits that exceed what the investors expect from
other similar-risk investment.

Inputs

Management

Structure and
control

Merge and
Restructure

International
Strategy

Cooperative
Strategy

Leadership
Strategy

Business
establishment and
Renovation

Competitive Strategy
gaining above-average
profits

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1.2. Vision, mission and value
1.2.1. Vision

services and orientation of an enterprise in a specific period.

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However, it is also noted that mission should not be so great that it can not be
conducted. If so, it will destroy confidence of the organization’s members. A
challenging goal shall be possibly fulfilled although it forces the managers to try to
improve competence with exceptional efforts.

1.2.3. Value
The core values are basic and sustainable principles for an organization.
Among the guideline principles, few principles are free from time-constraint. Core
values do not need external advocacy; they are meaningful and significant to the
internal organization.
Large-scale companies should define its own core values that are not binding
with current environment, competition requirements and management method.

1.3. Business strategy analysis
1.3.1. Macro environment analysis
While the five-pressure model by M-Porter goes to detail analysis of sectoral
business environment, PEST studies the influences of factors in macro environment.
These factors includes:
o

Politics

o

Economics

+ Policies: Government’s policies will affect to enterprises, they can help to
generate profits or challenge the enterprises. They include policies on trade and
commerce, sectoral development, economic development, tax, competition
regulating, customer protection…

(2) Economic factors: Enterprises should pay attention to economic factors in shortterm, long-term and the Government’s interference to the economy. Commonly,
enterprises will base on economic factors to decide their investment in specific sector
and business areas.
+ Economic status: Any economy has its own cycles; in each stage of the
economy, the enterprises will have their own appropriate decisions.
+ Factors influencing to economy: interest rate, inflation…
+ Government’s economic policies: Regulations on basic salary, Government’s
economic development strategies, incentive policies for enterprises: tax cuts,
subsidy…
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+ Future economic prosperity: GDP growth rate, GDP proportion per
investment funding…

(3) Social and cultural factors: Each country, territory has their own social and
cultural features. The customers in those regions are featured by those factors.
Culture values are parts of a society and foster that society for its existence and
development. Therefore, the cultural factors are always carefully and strictly
preserved, especially the spiritual culture values. Yet, it can be neglected the crossculture from other cultures into a nation. Such cross-culture will make change to the
customer behavior, life style and create development prosperities to economic sectors.
Apart from culture, social features are also taken into consideration by
enterprises in conducting market research; social factors will distribute social
community into customer groups, each group will have different psychological
features and income…

1.3.2. Sectoral environment analysis
The strategy maker is required to have analysis and forecast of competitive
forces in sectoral environment to find out opportunities and threats for the enterprises.
The five-force model by M.Porter helps strategists to carry out the analysis.
(1) Potential rivals: Potential rivals include the enterprises currently not having
competition in the same industry but possible becoming rivals if they decide to chose
and enter the industry. Those are threats to current enterprises.
The level of advantages and disadvantages of entering an industry for a
potential rivals largely depends on entrance barrier of that industry.

(2) Competitive rivalry within the industry: The second force in Porter’s five forces is
the intensity of rivalry among competitors in the same industry. If the competitors are
weak, the enterprise has chance to raise prise and earn more profits. In contrast, if the

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competitors are strong the price competition is remarkably fierce, all the price
competition leads to vulnerability.

(3) Bargaining Power of Customers: Customers are regarded as a competitive threat
when they force enterprises to reduce price or require for higher quality products or
better service. On contrary, when the customers are subordinate, the enterprise will
have chance to raise price for more profits. Customers may the consumers or the
distributors (wholesalers, retailers).
Customers bargaining power is likely to be high when:
• The supplying industry comprises a large number of small operators and
customers are a small number.
• Customers buy large volume
• Supplying industry depends on customers

inventory… are carried out to transform inputs into products.
- Production: Essential activities to transform inputs provided by internal logistics into
end- products including production and packaging…
- Outbound logistics: Activities relating to collection, storage and transportation of
end-products to customers.
- Marketing and sales: Essential activities to provide tools for customers to buy
products and attract customers. For marketing and sales, companies often launch
advertisement campaign and sales promotion, select proper distribution channel and
resources to develop and support their sales forces.
- Service: Activities designed to improve or maintain product value. This includes all
areas of service such as installation, after-sales service, complaints handling, training,
replacement and modification.

1.3.3.2. Supplement activities
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- Procurement: This function is responsible for all purchasing of goods, services and
materials. It also includes equipment for use during the production process.
- Technology Development: it comprises essential activities to raise quality of
products and production process. Technology is in different forms such equipment,
fundamental research and procedure design, products and service.
- Human Resource Management: it includes activities relating to recruitment, hire,
training, development and payment to employee.
- Firm Infrastructure: It includes activities such as general management, planning,
finance, accounting, legal support and relation with Government’s bodies to support
all the value chain. Through its infrastructure, companies define their opportunities
and challenges, resources and capacity as well as support to basic potentiality.
Each activity should be considered in a correlative relation with capacity of
rivals. Accordingly, each company should evaluate whether its activity is dominant,


environment.

external environment.

O: List of

Strategic combination SO: taking

Strategic combination WO: taking

opportunities

the company’s advantages to

advantages of external

from external

exploit opportunities from

opportunities to overcome

environment

external environment.

weaknesses.

O: List of

to its rivals.

1.4.1.1. Cost domination strategy
The strategy includes a number of activities to produce goods or services
whose features or characteristics that are acceptable to customers with lowest cost
and is equivalent to that of the rivals’ cost to produce goods and services of the
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similar utilities. Specifically:
-

Relatively standardized products

-

With many utilities accepted by customers

-

Lowest competitive price

1.4.1.2. Cost leadership strategy
- Competing with current rivals: cost-based competitive advantages
• Rivals are hesitant to price-base competition.
• Few rivals for price competition leading to high profits.
- Negotiating power of customers: can be lessened by declining the price below
rival’s, obtaining the bargaining powers from the customers to suppliers.
- Negotiating power of suppliers: can be lessened by the followings:
• Accept increasing costs due to low position of competitive price.

• Accept price rise due to higher marginal profit.
• Product price can be raised given the supplier’s price as the customers are
faithful to brand-name of the suppliers.
- Potential threats of new entrants: can be dealt with as:
• New products need to have dominant features than the products that have been
circulated in the market.
• New products need to have, at least to say, equivalent utilities to the proved
products but lower price.
- Substitute products: be in better positions compared to the substitute products as:
the faith to distinctive brand-name may be reduced their trials to other new products
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or decision to change suppliers.

1.4.1.4. Focus strategy
The strategy requires a number of activities to be done to produce goods and
services for a segment of certain competitive market:
- Certain customer groups: Young persons or adults
- Different segment of a product line: Professional handicraftsman and self-makers.
- Different market segments:
Type of focus strategies:
• Cost-based focus strategy
• Differentiation-based strategy
For implementation of a focus strategy, firms need to carry out a number of
basic activities and actively support to build up and maintain competitive advantage
and obtain the above-average profits.

1.4.2. Business strategy selection
As a business manager, you need to have a strategy to be successful. Business

firm is collective of professionalized units with certain obligations and authorities,
their relation and interdependence are arranged within levels to ensure the
implementation of management functions and obtaining the share goals of the firm.
Organization structure is designed into management units and levels.
Management units are separate and professionalized with certain management
functions. Management level mentions the unification of all management units that
reflects the functional partition in lateral direction while the number of management
levels reflects the functional partition in vertical direction.
Significant roles of organizational structure are shown on two aspects:
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